Monday, July 13, 2009
Chinese shipbuilders expect one third of capacity to be idle after 2011
Monday, 13 July 2009
Caijing quoted the China Association of National Shipbuilding Industry as saying that China's shipbuilding facilities are expected to have idle capacity of more than 20 million deadweight tons or one third of the total after 2011 as new shipyards commence operations amid a severe demand slump.
Citing the London based shipbroker Clarkson Plc the association said in a statement on July 1st that new shipbuilding orders worldwide totaled 1.6 million DWT in the first five months down by 98% from a year earlier.
The CANSI said China's total shipbuilding capacity has reached 60 million DWT while monthly new orders have been lower than output over the last eight months. Order cancellations and contract renegotiations are also increasing.
The association said that incomplete statistics show that nearly one million DWT in new vessels have been built but cannot be delivered as scheduled due to customers' financial problems.
According to the CANSI, the same data also show that from October 2008 to May orders of 152 vessels, or 4.4 million DWT were canceled, accounting for 2.3% of total orders the country shipbuilders held at the end of May. It added that the real cancellation rate could be as high as up to 5% if all the nation's shipbuilders are surveyed.
The association predicted that in the second half of 2009, the impact of lower prices for used vessels will continue to be felt by the new-vessel market and that the bearishness facing the shipbuilding industry is not expected to turn around soon.
CANSI urged shipbuilders to review existing orders they held to prepare for any possible disputes with buyers.
Source: Caijing
